A National Disaster Insurance System It’s What Australia Desperately Needs Nick Haughain
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t the time of writing, the 2019-20 bushfire season has seen over an estimated twenty million hectares burned, with over 1500 buildings destroyed and 29 fatalities. This is one of the worst bushfire seasons Australia has ever seen. In the aftermath of this horrific disaster, another crisis has emerged. A national crisis of homeowners not having the insurance needed to adequately recover from the bushfires. When communities cannot recover from natural disasters, social cohesion is destroyed, and residents slowly move away never to return. Australia is one of the few developed nations which predominantly rely upon private insurance markets to recover from natural disasters. This prevents underinsured or uninsured home and business owners from fully recovering from damage caused by natural disasters. Of the almost 200 homes destroyed in the October 2013 Blue Mountains bushfires, more than 65% were found to be either underinsured or completely Ed.1 2020
uninsured. According to a December 2017 report by the Victorian government, only an estimated 46% of Victorian households have sufficient insurance to rebuild their homes in the event of a natural disaster. Low insurance coverage rates illustrate a natural disaster insurance system that it is simply not fit for purpose and is failing ordinary Australians. The 2011 Japan earthquake and tsunami claimed the lives of nearly 16,000 deaths and resulted in $235 billion of economic damage according to the World Bank. Despite this, only 10% of Japanese businesses and 30% of Japanese real estate are covered by earthquake insurance policies. With only 14% to 17% of households being covered by insurance, recovery has become painstakingly expensive and difficult with a 2014 Japanese government report estimating that 267,000 victims were still living in temporary accommodation six years after the earthquake struck. In comparison, the 2011 Christchurch earthquake caused possibly up to $30 billion worth of economic damage, yet Christchurch’s physical and economic thebrief.muls.org | 23
